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MMG Insurance Company v. Podiatry Insurance Company of America

United States District Court, D. Maine

April 18, 2017




         An insurance company alleges that, as part of the settlement of an underlying personal injury action, it agreed to split a settlement amount with another insurer, and that the insurers expressly reserved the right to seek recovery from the other based on various coverage defenses. Relying on its reservation of rights and principles of equity, the insurance company filed suit, seeking reimbursement from the other insurer for the portion of the settlement it paid, and claiming that the accident was excluded under its policy and covered under the other insurer's policy. The insurer's lawsuit contains three counts: (1) breach of agreement, (2) equitable contribution, and (3) equitable subrogation.

         The other insurer moves to dismiss all of the counts for failure to state a claim. The Court dismisses the equitable contribution count because the doctrine is inapplicable when a party seeks to be relieved of the entire burden of its loss. The Court, however, denies the motion to dismiss the two remaining counts because the insurance company has pleaded sufficient facts to demonstrate that it may be entitled to recover its portion of the settlement payment from the other insurer, either based on their agreement or on the doctrine of equitable subrogation.


         On November 10, 2016, MMG Insurance Company (MMG) filed a complaint against Podiatry Insurance Company of America (PICA) in the state of Maine Cumberland County Superior Court claiming it was entitled to be reimbursed by PICA for the amount of its contribution to the settlement in an underlying case. Notice of Removal Attach. 3 Compl. (ECF No. 1); Aff. of Braden M. Clement Attach. 1 Docket R. (ECF No. 14). PICA removed the case to this Court on December 7, 2016. Notice of Removal (ECF No. 1).

         On December 7, 2016, PICA also filed the instant motion to dismiss. Def.'s Mot. to Dismiss (ECF No. 5) (Def.'s Mot.). On December 27, 2016, MMG filed an amended complaint. Am. Compl. (ECF No. 17). On the same day, it responded to PICA's motion to dismiss. Pl.'s Resp. to Def.'s Mot. to Dismiss (ECF No. 18) (Pl.'s Opp'n). PICA replied on January 10, 2017, moving to dismiss both the Complaint and Amended Complaint. Def.'s Reply in Supp. of its Mot. to Dismiss (ECF No. 25) (Def.'s Reply).


         As an initial matter, the Court addresses the amendment of the complaint after PICA filed its motion to dismiss. Under Federal Rule of Civil Procedure 15(a), a party “may amend its pleading once as a matter of course within . . . 21 days after service of a motion under Rule 12(b).” Fed.R.Civ.P. 15(a)(1)(B). MMG properly did so on December 27, 2016, twenty days after PICA filed its motion to dismiss under Rule 12(b)(6).

         In its opposition to the motion to dismiss, MMG explained that “[a]lthough [it] does not believe its complaint is legally deficient, it has filed an Amended Complaint as a matter of course pursuant to Rule 15(a)(1)(B) that more clearly sets forth the multiple bases upon which MMG is entitled to assert its claims against PICA.” Pl.'s Opp'n at 1 n.1. Specifically, MMG added three counts to the Amended Complaint not explicitly stated in the original Complaint: Count I-Reapportionment/Contribution by Agreement, Count II-Equitable Contribution, and Count III-Equitable Subrogation. See Am. Compl. at 3-6. MMG also added details concerning the alleged agreement and settlement payment: MMG alleges it expressly reserved its rights to seek recovery from PICA and MMG further alleges that its settlement “payment was not made as ‘volunteer', but rather as an insurer against whom claims were asserted.” See Id. ¶¶ 8-9, 13, 19.

         Typically, this amendment would render the pending motion to dismiss moot. See Cate St. Capital Inc. v. Indus. Intelligence Inc., No. 1:14-cv-00200-JDL, 2014 U.S. Dist. LEXIS 171548, at *2 (D. Me. Nov. 17, 2014), adopted by 2014 U.S. Dist. LEXIS 170629 (D. Me. Dec. 10, 2014) (“Because Plaintiff's amended complaint is now the operative pleading, Defendants' response to the original complaint (i.e., the pending motions to dismiss) is moot”). However, in its motion to dismiss, PICA anticipated potential claims, including the claims for equitable contribution and subrogation that MMG added in its Amended Complaint, and PICA addressed those claims in both its motion to dismiss and reply. It would be futile to dismiss PICA's motion without prejudice, only to have PICA refile another motion to dismiss with effectively the same arguments. As the later amendment of the Complaint does not affect the substance of the pending motion to dismiss, the Court considers the Amended Complaint as the operative complaint for purposes of the motion. See Edson v. Riverview Psychiatric Ctr., No. 1:16-cv-00079-JAW, 2017 U.S. Dist. LEXIS 27808, at *3 n.1 (D. Me. Feb. 28, 2017).


         MMG is an insurance company organized under the laws of the state of Maine with authority to transact the business of insurance in the state of Maine. Am. Compl. ¶ 1. PICA is an insurance company authorized to conduct business in the state of Maine that issues professional liability insurance policies in the state of Maine. Id. ¶ 2.

         On or about May 15, 2013, William Dickson, now deceased, visited his podiatrist Peter Ocampo, DPM, for treatment of his foot, specifically to perform a debridement procedure. Id. ¶ 3. Debridement is a medical procedure involving the removal of dead, damaged, and infected tissue to improve the healing potential of the remaining healthy tissue. Id. ¶ 4. During the visit, Dr. Ocampo wheeled Mr. Dickson's wheelchair adjacent to a footrest of the treatment chair. Id. ¶ 5. Dr. Ocampo lifted Mr. Dickson's foot approximately six to ten inches off the footrest of the wheelchair, at which time the wheelchair flipped over backwards causing Mr. Dickson to hit his head on the floor (the accident). Id.

         The Estate of William Dickson commenced a civil action against Dr. Ocampo in Cumberland County Superior Court with Docket No. CV-15-491 (the Civil Action) for injuries sustained in the accident. Id. ¶ 6. Both MMG and PICA agreed to provide Dr. Ocampo with a defense subject to a reservation of rights. Id. ¶ 7. A mediation of the Civil Action took place on June 2, 2016; both MMG and PICA participated in the mediation despite a coverage dispute between PICA and MMG. Id. ¶ 8. MMG and PICA could not resolve their coverage dispute at the mediation but agreed to settle the claims in the Civil Action by making equal contributions to the settlement, with each insurer reserving the right to seek recovery from the other based on the various coverage defenses. Id. ¶ 9.

         MMG had issued a Businessowners policy to Southern Maine Foot and Ankle, P.A. with Policy No. BP20936155 that was in effect at the time of the 2013 accident. Id. ¶ 10. The MMG insurance policy contained an exclusion for professional services that reads in part:

j. Professional Services
“Bodily injury”, “property damage”, “personal and advertising injury” caused by the rendering or failure to render any professional service. This includes but is not limited to:
(4) Medical, surgical, dental, x-ray or nursing services treatment, advice or instruction;
(5) Any health or therapeutic service treatment, advice or instruction;
(6) Any service, treatment, advice or instruction for the purpose of appearance or skin enhancement, hair removal or replacement or personal grooming.


         PICA had issued a professional liability policy to Dr. Ocampo and Southern Maine Foot and Ankle, P.A. with Policy No. 1PD0014194 that was in effect at the time of the 2013 accident. Id. ¶ 11. The PICA insurance policy provided coverage for liability arising out of the provision of “professional services” with the term “professional services” being defined as:

(o) “Professional services” means the providing of medical services, including medical treatment, diagnosis of disease or surgical intervention. It shall also include acting as a member of a recognized accreditation committee, peer review committee or like body, or the rendering of expert opinions about the propriety of care as long as the ...

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